DuPont Decomposition
Why does TORNTPOWER earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
16.4% = 10.4% × 0.79 × 2.01
Latest: FY2025
Profitability
Net Margin
10.4%
8.0% →10.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.79x
0.20x →0.79x
Revenue per ₹ of assets
Leverage
Equity Multiplier
2.01x
2.72x →2.01x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 12.0 pp over 3 years. Driven by net margin improving (8.0% → 10.4%), asset turnover improving (0.20x → 0.79x), leverage falling (2.72x → 2.01x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 8.0% | 0.20 | 2.72 | 4.4% |
| FY2024 | ₹0Cr | ₹0Cr | 6.8% | 0.20 | 2.77 | 3.7% |
| FY2025 | ₹0Cr | ₹0Cr | 10.4% | 0.79 | 2.01 | 16.4% |
How to read DuPont
- • Rising ROE from margin = pricing power, operational improvement (good)
- • Rising ROE from turnover = better asset utilization (good)
- • Rising ROE from leverage = more debt, amplified risk (caution)
- • Falling ROE across all three = structural deterioration (red flag)
DuPont decomposition from audited annual financials. Factual analysis, not investment advice.